Other health insurers are much more generous than Southern Cross
While Southern Cross quietly withdrew its non-surgical hospitalisation benefit in 2020, other health insurers continue to offer far more generous cover than the $60,000 benefit – but they mostly aren't rushing to tell GoodReturns about it.
Friday, September 8th 2023, 12:11PM 
2 Comments
by Jenny Ruth
For example, AIA pointed us to their website which confirms it's equivalent benefit provides up to $500,000 a year cover per policy and it provided some general statistics on what it pays out on all the benefits it offers, but nothing specific to this particular one.
“Unfortunately AIA is unable to provide further information about this,” its response said.
nib wasn't much more forthcoming, saying that it “provides coverage for non-surgical hospital-related benefits” up to a maximum limit of $300,000 a year for its Ultimate Health Max product.
“This includes cover for services such as cardioversion, cancer treatment and IV injections,” nib said.
It provided no information on claims rates, average payouts or any other sort of data – the reason GoodReturns wanted to know about this was because Southern Cross had cited the low rate of use of its benefit as its reason for scrapping it.
However, Naomi Ballantyne at Partners Life was much more forthcoming, which is perhaps yet another indication of why she's been such a successful serial entrepreneur.
Ballantyne explained that her company doesn't offer cover for small everyday expenses, such as doctor's visits, but reserves its cover for the big life-changing or threatening events such as paying for expensive cancer drugs.
“The most important thing about us is that we guarantee that once the client has cover, we can never take anything away,” she says.
“We can add, and we have over the years, but we can never take anything away.”
The reason Southern Cross was able to withdraw its non-surgical hospitalisation benefit was because the wording of its policies allows it to do this, and other companies have similar wording in their policies.
“We don't believe you should do that to a customer,” Ballantyne says.
The Southern Cross move came to light after a customer who had used the benefit for past non-surgical hospitalisations but had suffered a change in circumstances that caused them to review their policy with the company and realised the benefit was no longer there.
Ballantyne says the largest single medical claim Partners Life paid last year was $280,000 for gastrointestinal cancer treatment.
Her company's three largest categories of claim against this benefit last year were cancer, costing $12.4 million in payouts, digestive tract conditions, costing $9.1 million, and investigations and tests, costing $8 million.
Southern Cross has said that its 2019 review found for the now withdrawn benefit it had paid an average of $414 per claim for 801 members and that most of the claims were for IV infusions or overnight accommodation associated with sleep studies.
Graeme Lindsay, who provides analysis to life and health insurance agents through his firm Strategy Financial Services, provided GoodReturns with a list of firms which continue to offer superior benefits to the one Southern Cross cancelled.
As well as the companies already mentioned, Accuro Smartcare/Smartcare+ offers cover up to $300,000 per person, per year, and Unimed Hospital Select Plus offers up to $65,000 per person, per year.
| « Southern Cross says it told advisers, policyholders of withdrawn benefit | Industry researchers also in the dark on Southern Cross benefit » |
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The reality of the non-surgical benefit is the security for clients of being able to access new treatments approved by MedSafe and funded by Pharmac as they come to private health care.
We have had numerous stories in mainstream media about the lack of approvals for funding by Pharmac, which has potentially limited the effectiveness of the non-surgical benefits as catch-alls for new treatments becoming available in the last few years.
That's not to say it's not going to change, and it also highlights the need for non-Pharmac or unfunded medicines coverage in clients' policies.
If it is approved for use by MedSafe but not funded by Pharmac, then only those policies that have non-Pharmac cover will respond.
The other aspect that makes the situation quite disingenuous; Southern Cross has taken the approach of moving and defining treatments as they become regular established claims into one of two areas:
1. A newly defined benefit (which is how they attempted to bury the removal of non-surgical hospitalisation.)
2. or putting it on the unapproved treatments list. Of which there is an extensive page on this on the Southern Cross website.
Making their own case about the benefit's usefulness after moving or excluding treatments, the benefit did cover!
We can wax lyrical about the number associated with non-surgical benefit value, but mostly it's not massive claim values, so the existing $60,000 of cover that was removed was sufficient to catch the things most of us expect the benefit to do.
There are other claims, they are very specific, and there aren't a lot of them. But those that need this cover really need this cover. This is the other aspect; people had benefits they were using or expected to have that they no longer have. That's not playing fair.
Non-Pharmac unfunded claims paid out of non-surgical hospital benefits are the single biggest claim area for many providers.
Southern Cross did define cancer coverage and added unfunded cancer options to their policy, removing significant claims from non-surgical hospitalisation, fueling their justification that it was an area not utilised too.
Don't get me started on the unfunded cancer benefit they added; it's subject to the same 30-day Southern Cross changes it's mind terms and conditions that the rest of their policies have.
In fairness, Accuro, AIA, and nib (for their plans that are not Ultimate Heath Max or Major Medical Deluxe) all have 30-day rights to review benefit terms and conditions.
The difference is AIA, Accuro, and nib have not repeatedly demonstrated they remove useful benefits from their covers like Southern Cross has!